Dougherty says focus is the key (plus of course not having the expense of printing a newspaper):

“How can the Tribune spend millions while our online news organization spends less than $2 million?

“It’s simple. The new news organization doesn’t have an advice columnist, a suburban bureau, an auto writer, or a fashion critic. It does one thing, and it does it better than anyone else: Provide Chicago residents with the information they need to make smart decisions about public affairs.”

His budget shows 17 reporters, two photographer/videographers and three editors. The reporters make $41,000 a year, which Dougherty says is the market average. They cover beats including education, transit, courts, crime and local government.

Journalists, being journalists, will quibble with the exact numbers (and who wouldn’t argue that a good journalist is worth more than $41,000 a year) and I question Dougherty’s assertion that his operation could “replace the local-news reporting function of a Sun-Times or Chicago Tribune.” But Chi-Town news could be one significant piece of the local news puzzle, along with The Windy Citizen, a blog aggregator, and EveryBlock Chicago, which scrapes the Web for micro news and organizes it to the neighborhood block level.

Local news is atomizing across the Web in many communities, as this database of nearly 800 community news start ups attests. This suggests a growing need for an aggregator who provides links to other sites and perhaps additional explanation and context. This becomes not only a vital community service but a way to bring in more eyeballs to the site..

That may be a strategy that Hearst adopts in Seattle, where it has announced it will either close The Post-Intelligencer or take it online only in March. One storyline here is that the P-I online, with a perhaps a fifth of the staff of 100 it has now, will become an aggregator of news about Seattle, linking to emerging citizen and micro-local sites and even, possibly to content of its archrival, The Seattle Times. Read the story in The Stranger.

I think an effort like this could be important in lowering news industry resistance to linking out to the content of others, a practice that better serves readers and can boost site traffic when others link back.

Both of these experiments are cheaper to run because they do so much less than the multifaceted newspaper. But it’s not clear whether either is sustainable.

The fate of an online only P-I rests on its ability to grow its audience and monetize it, both uncertain propositions.

The good news is that these are potentially viable models that keep local news produced by journalists in the news stream. My question is whether established newsrooms can or are developing operations like these within their larger newsroom—small, focused activities that pay their own way. Is that a path to the future as newsroom staffs grow smaller? What does the local newsroom give up and how does it focus its reporting in ways that are most helpful to the community? Can print newsrooms develop online products and teams that start to pay for themselves? Please share your ideas in the comments.